FIRST Minister Rhodri Morgan last night welcomed signs of a resurgence in Wales' once great steel-making industry after news of a $100m expansion at Alphasteel in Newport.

FIRST Minister Rhodri Morgan last night welcomed signs of a resurgence in Wales' once great steel-making industry after news of a $100m expansion at Alphasteel in Newport.

Trade publication Metal Bulletin reported that Alphasteel, which is now in Iranian ownership, is to increase capacity at the plant up to 2.4 million tpy (tonnes of steel per year).

The industry publication said that this would involve a new furnace and the renovation of the two existing furnaces. It estimated the investment needed as $100m (about &#xA3;57m).

"The new meltshop due for commissioning at the end of 2004 will increase capacity to 2.4 million tpy of continuously cast billets and slabs," said an Alphasteel spokesman.

"Finished product production is expected to reach 1.5 million tpy of hot rolled wide coil and 750,000 tpy of wire rod and rebar for the construction industry. A further phase of development is also planned to introduce added value facilities for hot rolled wide coil products by installation of galvanising and cold rolling plant."

There are now hopes that the move could result in the creation of much welcomed steel-making jobs in Gwent.

First Minister Rhodri Morgan, pictured, welcomed the boost as another indicator of an upturn in the fortunes of the Welsh steel industry.

"This comes on top of Corus's expansion plans for Port Talbot and Celsa's plans to expand production", he said, adding that this latest announcement meant that a total of around &#xA3;300m in investment was now being pumped in to Welsh steel plants.

"The steel industry has been written off by some people as an industry of the past," he said. "The signs are there now that is not true."

Mr Morgan said he believed that the two factors of the pound's lower, but stable, exchange rate with the euro and the quality of steel- making skill in Wales were behind the investment.

"It is an extraordinary turn around," he said. "This certainly means hundreds of additional jobs at Alphasteel and what Alphasteel are looking for are people previously employed in the industry to make this run.

"They recognise that the skills available in South Wales are second to none."

Mr Morgan said he had spoken to Celsa regarding concerns that both Celsa and Alphasteel would be producing a similar product - reinforcement rods for the building industry, but had discovered this was not a major cause for concern.

"Imports are the problem for both of them," he said. "There is an annual UK market for 800,000 tonnes of steel for reinforcement, 600,000 of that is made up of imports."

Welsh plants may also have other factors beyond the skills of Welsh workers that now make them attractive for investment.

Metal Bulletin journalist Phil Gilchrist said some Welsh plants would prove attractive because they had been built with as yet unrealised capacity.

"The price of steel is high and demand is good in Asia so the market is an attractive one to invest in this year," he said. "They were designed to be bigger than they are, particularly Alpha Steel, and it is a perfect site to expand. It always had the potential to be bigger but previous owners had not done it.

"Also the British have had to become a lot more cost-effective and more productive given the market conditions."